5 ms·

The more I explore this concept of 'passive income' the more it seems like a unicorn not unlike the Facebooks and Instagrams of the world. Sure, it's possible

The more I explore this concept of 'passive income' the more it seems like a unicorn not unlike the Facebooks and Instagrams of the world. Sure, it's possible to generate truly passive income, without any ongoing work to sustain it, but such projects are so rare that it's impractical to pursue them. It's like saying you're going to create the next unicorn...good luck with that. 99.9% of endeavors worth doing pursuing require some level of constant work to continue capturing the value they generate. I say this as someone who made his first few 'passive' dollars LAST NIGHT WHILE I WAS SLEEPING. But I put 'passive' in quotes because this was after 5 months of working for nothing, and the grueling work required to keep my offering attractive continues.

douglaswlance 9y ago
Buy a financial asset. Boom! Passive income.
CryoLogic 9y ago
It's very easy to get passive income. Just buy high dividend mutual funds. 100k in the market should net you 4-12k per year.
- volkk 9y ago
  ah yeah, the good ol' 100k i have lying around should finally have some use for me!
  - oblio 9y ago
    Step 1 to become rich: already be rich! :)
  - graton 9y ago
    Spend less, save more :) http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
  - deleted 9y ago
    [deleted]
  - ggregoire 9y ago
    You don't need 100k to open one.
  - sn9 9y ago
    Compound interest is a powerful thing, especially if you sock away at least 10% of your income into index funds with every pay check.
- FussyZeus 9y ago
  Pretty sure if I had 100k it would already be invested, not just growing mold in my mattress.
- grondilu 9y ago
  I have about 50k€ on European and US stock markets. Amazingly enough, that only payed me 1128€ (after tax [I just checked my income tax form]) in dividends last year. I guess I suck at picking high-return stocks.
  - Cymen 9y ago
    Are you intentionally picking dividend-focused stocks though? That is a key aspect of it if you want dividends. Most stocks are not focused as much on dividends (presumably, people buy them for the potential increased value of the stock over time instead of potential dividend payments).
    - grondilu 9y ago
      > Are you intentionally picking dividend-focused stocks though? I used to when I started, but I don't anymore. Now I just buy stocks of companies I like. Lately for instance, I bought some NVDIA shares because I like what they do. Also last year I realized I didn't own any AMZN share and I thought that was not right, without even considering the fact that they don't pay any dividend at all. Same for Netflix or Cray or Tesla. In truth, my mindset is more of a collector than an investor :P
  - ggregoire 9y ago
    Have you look to professionally managed portfolios?
    - grondilu 9y ago
      Well, I don't trust professionally managed products (I'm in France as well btw) for various reasons. Basically I think in the long run it's better to manage your portfolio yourself. I'm sure I could get a better return if I was putting more effort into it, but I'm lazy so I don't mind. Also, at least if I don't earn much I only have myself to blame.
      - deleted 9y ago
        [deleted]
- erik14th 9y ago
  but if you're not reinvesting your passive will shrink over time due to inflation(I'm not sure about US but here in Brazil the dividends are subtracted from the stock valuation), so even then it requires some kind of maintenance. Capitalism is inherently competitive, if some way to generate capital is too easy it will become hard quite fast due to competition. If you can still make some money out of investing is because most people don't have the money or education to invest.
  - grondilu 9y ago
    > (I'm not sure about US but here in Brazil the dividends are subtracted from the stock valuation) What is that about?? Usually the market prices the dividend removal, but that only lasts so long. At any point during the year the market prices it back, in anticipation of the next dividend.
    - loco5niner 9y ago
      I'm also very curious about this. Did some research, and got no answers...
    - erik14th 9y ago
      in Brazil it's actually subtracted, if your stock is worth a dollar and you receive a cent of dividend the stock will be priced at 99 cents. Like, it's as if the dividend money you receive is actually a part of the stock you own.
  - loco5niner 9y ago
    My 401(k) automatically reinvents my dividends. > if some way to generate capital is too easy it will become hard quite fast due to competition. For the general population, saving money to invest is not easy.
- m52go 9y ago
  Along with that kind of passive income comes passive risk (i.e., risk you have zero control over). Not saying you're wrong, but it's something to keep in mind based on your goals.
conqrr 9y ago
Interesting. However, I would consider some income stream as passive if it there is a net positive gain without as much effort as my main job (maybe upto 10%, ~4 hrs per week). By that measure, even the income from investments can be counted as passive and hence it is not impractical to reach a point where I am earning half as much as I make in total from passive sources. (Not that I do, just a hypothetical situation).
artursapek 9y ago
Passive implies less-than-full-time work, not "no work". It also usually requires a ton of unpaid work invested up-front (hence why most people never try it), and after it's established it should mostly just run on autopilot. There's obviously an ongoing maintenance requirement, as any system has. Often people outsource parts like customer support to further automate things. Ideally the product is something you enjoy working on though, so the end result would be that 1. you have an income 2. you enjoy the work that you do have to do 3. you have a lot more spare time
- grondilu 9y ago
  > Passive implies less-than-full-time work, not "no work". Pretty sure passive really means "no work". Granted, it's a theoretical concept that in practice can only be approached, but "less-than-full-time" does not sound like a fair approximation. Some passive income can require less than an hour a month of "work" (basically doing some paperwork for your broker, filling your tax form or stuff like that).
sliverstorm 9y ago
It mostly seems like one of those fairy tales people eat up because they want it to be real. Who doesn't love the idea of perpetually making money for nothing? Like people who follow the stories of all the lotto winners. One day that's gonna be me! Back in reality, I rent a property into which I sunk a month of labor and lots of money for renovation. There's also ongoing repairs, which I mostly do myself. But sure, it's "passive" most of the time.

douglaswlance 9y ago

Buy a financial asset. Boom! Passive income.

CryoLogic 9y ago

It's very easy to get passive income. Just buy high dividend mutual funds. 100k in the market should net you 4-12k per year.

volkk 9y ago
ah yeah, the good ol' 100k i have lying around should finally have some use for me!
- oblio 9y ago
  Step 1 to become rich: already be rich! :)
- graton 9y ago
  Spend less, save more :) http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
- deleted 9y ago
  [deleted]
- ggregoire 9y ago
  You don't need 100k to open one.
- sn9 9y ago
  Compound interest is a powerful thing, especially if you sock away at least 10% of your income into index funds with every pay check.
FussyZeus 9y ago
Pretty sure if I had 100k it would already be invested, not just growing mold in my mattress.
grondilu 9y ago
I have about 50k€ on European and US stock markets. Amazingly enough, that only payed me 1128€ (after tax [I just checked my income tax form]) in dividends last year. I guess I suck at picking high-return stocks.
- Cymen 9y ago
  Are you intentionally picking dividend-focused stocks though? That is a key aspect of it if you want dividends. Most stocks are not focused as much on dividends (presumably, people buy them for the potential increased value of the stock over time instead of potential dividend payments).
  - grondilu 9y ago
    > Are you intentionally picking dividend-focused stocks though? I used to when I started, but I don't anymore. Now I just buy stocks of companies I like. Lately for instance, I bought some NVDIA shares because I like what they do. Also last year I realized I didn't own any AMZN share and I thought that was not right, without even considering the fact that they don't pay any dividend at all. Same for Netflix or Cray or Tesla. In truth, my mindset is more of a collector than an investor :P
- ggregoire 9y ago
  Have you look to professionally managed portfolios?
  - grondilu 9y ago
    Well, I don't trust professionally managed products (I'm in France as well btw) for various reasons. Basically I think in the long run it's better to manage your portfolio yourself. I'm sure I could get a better return if I was putting more effort into it, but I'm lazy so I don't mind. Also, at least if I don't earn much I only have myself to blame.
    - deleted 9y ago
      [deleted]
erik14th 9y ago
but if you're not reinvesting your passive will shrink over time due to inflation(I'm not sure about US but here in Brazil the dividends are subtracted from the stock valuation), so even then it requires some kind of maintenance. Capitalism is inherently competitive, if some way to generate capital is too easy it will become hard quite fast due to competition. If you can still make some money out of investing is because most people don't have the money or education to invest.
- grondilu 9y ago
  > (I'm not sure about US but here in Brazil the dividends are subtracted from the stock valuation) What is that about?? Usually the market prices the dividend removal, but that only lasts so long. At any point during the year the market prices it back, in anticipation of the next dividend.
  - loco5niner 9y ago
    I'm also very curious about this. Did some research, and got no answers...
  - erik14th 9y ago
    in Brazil it's actually subtracted, if your stock is worth a dollar and you receive a cent of dividend the stock will be priced at 99 cents. Like, it's as if the dividend money you receive is actually a part of the stock you own.
- loco5niner 9y ago
  My 401(k) automatically reinvents my dividends. > if some way to generate capital is too easy it will become hard quite fast due to competition. For the general population, saving money to invest is not easy.
m52go 9y ago
Along with that kind of passive income comes passive risk (i.e., risk you have zero control over). Not saying you're wrong, but it's something to keep in mind based on your goals.

conqrr 9y ago

Interesting. However, I would consider some income stream as passive if it there is a net positive gain without as much effort as my main job (maybe upto 10%, ~4 hrs per week). By that measure, even the income from investments can be counted as passive and hence it is not impractical to reach a point where I am earning half as much as I make in total from passive sources. (Not that I do, just a hypothetical situation).

artursapek 9y ago

Passive implies less-than-full-time work, not "no work". It also usually requires a ton of unpaid work invested up-front (hence why most people never try it), and after it's established it should mostly just run on autopilot. There's obviously an ongoing maintenance requirement, as any system has. Often people outsource parts like customer support to further automate things. Ideally the product is something you enjoy working on though, so the end result would be that 1. you have an income 2. you enjoy the work that you do have to do 3. you have a lot more spare time

grondilu 9y ago
> Passive implies less-than-full-time work, not "no work". Pretty sure passive really means "no work". Granted, it's a theoretical concept that in practice can only be approached, but "less-than-full-time" does not sound like a fair approximation. Some passive income can require less than an hour a month of "work" (basically doing some paperwork for your broker, filling your tax form or stuff like that).

sliverstorm 9y ago

It mostly seems like one of those fairy tales people eat up because they want it to be real. Who doesn't love the idea of perpetually making money for nothing? Like people who follow the stories of all the lotto winners. One day that's gonna be me! Back in reality, I rent a property into which I sunk a month of labor and lots of money for renovation. There's also ongoing repairs, which I mostly do myself. But sure, it's "passive" most of the time.